What Will Ecommerce Look Like in 10 Years?

By Allen | Published: January 7, 2010

San Telmo Market, Buenos Aires
Last week Fred Wilsion (@fredwilson) posted on his blog, AVC.com, about the movement of Social Commerce – the shift to an evermore social and interactive form of commerce on the web. He declared Etsy.com as the web’s closest equivalent to a real life open air market place, like that of the San Telmo market in Buneos Aires (see photo above).

His post got me thinking about the direction of ecommerce in the decade to come. In the last decade, we’ve seen an incredible evolution and diversification in the ecommerce space. We’ve seen Amazon.com with their “one click” shopping system take the hassle out of shopping online. We’ve seen virtual goods sales exceed those of real life equivalents in virtal worlds and online gaming platforms. And, recently, we’ve seen “mom and pop” style artisan stores gain an internet presence on sites like Foodzie.com and Etsty.com.

The evolution is easy to comprehend. Simply enough, the spectrum of shopping experiences online is beginning to mirror the same spectrum of experiences that we can find in real life today.

Whereas 10 years ago all ecommerce platforms looked and interacted with users in exactly the same way, today the way you interact with a site that sells you books is very different from a site that sells you food. And, in the decade to come, these experiences will continue to evolve and diversify to match their real world counterparts . Not all online shopping will conform to the most efficient check out process (like amazon), nor will it necessarily become more social and interactive (like Etsy.com).

In the real world, I don’t want to interact with a salesperson when I buy shoes or books. I want to make my purchase and get out the door. That same criteria holds true when I’m shopping online. And, Amazon.com and Zappos.com have designed their platforms in a way to meet that criteria – with simplicity and efficiency at their core.

However, when my girlfriend (@jessicadaniels1) purchased a unique bracelet in the San Telmo markets of Buenos Aires last summer, she wasn’t in a hurry. She wanted to haggle with the seller, see all of his products, and hear the story behind his jewelry shop. She wasn’t just buying a bracelet, she was purchasing a unique experience and a memory of that day and our trip. An experience that, currently, can not be fully replicated on the web.

Efficiency is easy to create on the web. A memorable, unique experience is not. I’m excited to see what innovations the next decade produces in the “social commerce” space.

Posted in Entrepreneurship, Revenue Models | 3 Comments

Why Consultants Need an Internet Presence

By Allen | Published: December 29, 2009

officespace
“But, we’re in the relationship management business. We don’t need a strong internet presence.” . . .

I hear it all the time from former colleagues and friends in the consulting business. Guess what folks, this isn’t 2002 anymore. An internet presence isn’t just for e-commerce and tech startups. Today, relationships are initializing for the first time via internet introductions and traditional consultants need to learn that there are more ways to sell your services than meeting someone face to face.

In consulting, networking and face-to-face interaction continue to be the name of the game – make a connection and build the relationship gradually over time. There are plenty of competitors out there and client retention requires frequent contact and communication. Most firms believe that (besides email) the internet as a relationship management platform comes in a far second place to pounding the pavement. And yes, personal interaction is vital to acquiring and maintaining clients, HOWEVER a sizable internet presence will increase your firm’s visibility as an expert in a field, lift brand awareness, and, in turn, make those initial cold calls or prospective client meet-ups 100x easier with increased conversion rates.

Your consultants already host speaking events to increase their credibility and visibility, why not record those speaking events and host them on your website? Your consultants already co-publish industry papers and articles in trade journals, why not provide the same content in a SEO friendly form on your website or run smaller more frequent industry news on a blog? You could host industry events calendars and interactive webinar presentations that allow clients to interact on your site, etc. The list goes on.

A dynamic, interactive web platform chalk full of top industry specific information is a gold mine for researchers, journalists, and potential clients.

In an industry that’s saturated with competition, placing yourself as the online information and knowledge center for your field of expertise will pay dividends well into the future. Even better, once you attract a digital audience online, you can see how well your efforts convert. Imagine having statistically significant data to show how well your “relationship management” efforts convert to new or continued client engagements. That’s powerful stuff that very few in the consulting industry are utilizing today (I’ll write more on this in the future).

Speaking engagements, client dinners, and hand shakes happen once. Quality web content is timeless, viral, and measurable. Utilize it.

Posted in Business Development | 2 Comments

A Revival of the Mom & Pop

By Allen | Published: December 10, 2009

momandpop
Walmart may have run your local family owned grocery out of town, but they did not spell the end to Mom & Pop businesses. Another type of small family business is making a notable comeback, and they’re doing it on the web.

Artisan food and craft producers managed to survive the corporate invasion of small town America through unique product differentiation and offering higher quality with a much better story attached. Which sounds better to you? Ground beef from the back top shelf at Walmart . . . or 100% grass-fed Black Angus steaks from the open pastures of southern Missouri – hand cut by 3 generations of the Menefee family?

As the big box store behemoths moved into town, their low cost production and inventory methods made it near impossible for small family businesses to compete. Any store competing solely on price didn’t stand a chance, and, as should happen in market economies, eventually went the way of the dinosaur. The small town markets were shaken up and people began demonizing the corporations for exterminating small family business as we know it. At least, up until now.

With the help of a few technology startups like Etsy.com and Foodzie.com, these small family businesses are taking the big stage through user friendly ecommerce shops that aggregate artisan products from producers all over the country – giving customers a one-stop-shop for all their specialty product desires and giving artisan producers a podium to tell their story. Whether it’s hand-made lace from Virgina or fresh maple syrup from Vermont, it’s all there.

Quality products with a story to tell have always been important and will never be fully replicated by big box store producers. I believe we will see a much greater revival of Mom & Pop style small businesses as they start aggregating on the web. This is only the beginning.

Posted in Entrepreneurship | 1 Comment

Hacking Consumer Psychology: The Power of the Group (and Groupon.com)

By Allen | Published: December 3, 2009

crowd

The power of the consumer collective is raging full steam ahead and Groupon.com is cleaning up in its wake!

The Chicago based startup, that offers extreme discounts on local products if enough people opt-in to the deal, just announced a series B round of financing of $30 million. Their success over the last year can be attributed to a firm understanding of the consumer psychology.

The magic formula is part economic theory and part social psychology. Groupon offers extreme discounts on local products to consumers by acquiring the critical mass of participants necessary to drive down the customer acquisition costs for businesses, and therefore, increase the profit margin. This increase in profit margin is then shared by Groupon, in the form of high commission rates, and consumers, in the form of discounted products. However to attain this critical mass of participants, Groupon ingeniously calls on the individual user to spread the news of deals virally, as users require the help of the collective group to receive the deal themselves.

Groupon has changed the economics of consumption. Purchases are no longer personal self-interested actions. They require group participation.

Groupon addresses the local small business niche – a group that would not otherwise have the exposure or consumer base to reach a participant critical mass and the economies of scale to offer such deals.

However, Groupon’s success begs another question: what untapped opportunities are there for larger corporations that DO have the necessary exposure to create a viral buzz on their own? For example, what if airlines could offer specials, similar to Jet Blue’s Unlimited Flight special, that require a certain number of participants for the deals to take effect?

Consumers would win in the form of amazing discounts on quality products, and companies would win in the form of powerful RISK-FREE, low cost campaigns that increase sales and improve brand awareness.

And who doesn’t like a win-win?

Posted in Entrepreneurship, Revenue Models | 7 Comments

What’s Print Media’s Golden Ticket? A Reverse Engineered New Product.

By Allen | Published: November 21, 2009

goldenticket
Publication networks like Conde Naste are the pinnacle of experiential media and advertising. But, they are selling the wrong product.

The severing of Conde Nast’s Gourmet magazine title (among others) was a brash reality check to the entrenched media industry leaders, oblivious to all prior warnings, that NOW is time to adapt or become extinct!

The shift to online (at least partially), combined with a reduction in journalist staff and increased content aggregation, is the new operating model being implemented to streamline publication, capitalize on the shift to social media, and dramatically cut costs. However, while lean operations and cost cutting are immediately necessary, very few are tackling the REAL elephant in the room: How to decouple oneself from the sinking ship of advertising and adopt a new (read: better) revenue model? The answer . . . ?

Reverse engineer the experience of a magazine into a better product. I’ll explain.

The use of Experiential Advertising, the marketing of a product or brand through an experience rather than the placement of advertisements, in selling products is nothing new. Companies like Red Bull have perfected the art by sponsoring alternative athletes and lifestyles, creating proprietary events like Red Bull’s Flugtag (check out the footage from the last event in Chicago here), and transforming its website into a blog (cite: RazorFish FEED). All done in the name of creating a brand experience that intimately connects with their customers, and, ultimately, sells a butt load of products.

Now, apply this same idea to the arena of media publication. Pick up a copy of Conde Nast Traveler or Food and Wine Magazine and hop aboard a 200 page scuba diving trip through the South Pacific’s Micronesian islands or on a backcountry bike and food tour along Italy’s Amalfi Coast. Dive head first into stories that tug at your emotions for adventure, romance, and food. Now, if that is not the pinnacle of experiential media and advertising, then I don’t know what is.

Flip the idea of experiential branding on it’s head and work backwards. These publications have the branding and customer experience, now they need a product to sell that directly correlates with the brand experience they’ve created.

For example, take the online blog network Sugarinc.com, which includes the blogs PopSugar (celebrity gossip), FabSugar (fashion), LilSugar (mothering), etc — all edited and designed with 28-year-old women in mind. In 2007, Sugarinc.com acquired the shopping e commerce platform ShopStyle as a way to offer its readers the exact clothing and styling options that Sugar’s articles discussed. In turn, it developed a revenue platform that enhanced the brand and user experience already created by the content – a perfect marriage.

Media publishers are sitting on the golden ticket of experiential advertising. If they can only pick their heads out of the sands for long enough to realize it, they may find some interesting revenue alternatives by developing their own new products.

More on this topic to come in the future . . .

Posted in Entrepreneurship, Revenue Models | 1 Comment

Are Financial Services Draining Our Economy’s Future?

By Allen | Published: November 10, 2009

cardsburning
A friend passed along an article outlining the historical growth of the financial services industry, as a percentage of total US GDP, over the last 20 years. I was terrified by the results. As of 1965, the financial services industry accounted for only 3% of total GDP. As of 2007, that number had more than doubled to 7.5%!

So, why is this a problem?

Because, the financial services industry creates “soft” value, and you don’t want a significant portion of your country’s economy driven by soft value. “Hard” value is the type of value that spawns new industries, creates new job categories that didn’t exist 5 years ago, and exponentially self-perpetuates its own growth and the growth of other industry sectors. It’s the type of value you want produced at the core of your country’s economic engine. “Hard” value is clean energy, mobile technology software, and biomedical innovations.

On the other hand, soft value creation, while still revenue generating, lacks the long term upside and exponential growth component of hard value. Soft value is management fees and trading commissions – the core revenue of financial services companies

Yes, a healthy financial industry is a necessity in a modern economy. Access to credit, savings, and money distribution (check writing, atms, transfers, etc) are the pieces of infrastructure supporting all other business activity. However, every dollar made by adding complex layers to these basic functions is a dollar pulled out of the hard value creation economy, and every individual managing someone’s assets for a fee is one more person removed from hard value production.

Technologies that spawn new industries (or change old ones for the better) are the catalysts that drive successful, mature economies like that of the United States. Innovations that change the course of our everyday lives are the business models that will propel America into the future, not those that survive by skimming a few dollars off the top.

Be afraid of macro growth based on sectors that offer soft value. The future is built by those with big ideas. If America wants to stay ahead, we are going to have to think bigger than management fees.

Posted in Unconventional Ideas | 3 Comments

Insider Trading: Friend or Foe

By Allen | Published: October 27, 2009

wallstreet
Insider Trading – A harmful crime against an unknowing and vulnerable public? Or, a new medium for transparency and competition in a rapidly evolving financial market begging for reform? Either way, we should be looking at it from a different angle.

This weekend’s article in The Wall Street Journal titled “Learning to Love Insider Trading”, makes the argument (rather compellingly) that enforcing insider trading as a crime is not only subjective and unfair, but harmful to the market (I highly recommend you read the article here).

But this post isn’t an argument for or against the legalization of insider trading. It’s an argument for a different problem solving philosophy. An approach that the WSJ article uses to deconstruct preconceived notions regarding the legality of insider trading. And, it’s the exact same approach we SHOULD be using to address our current flaws in the financial market regulatory system. I’ll explain.

One of the article’s main arguments for legalized insider trading can be paraphrased as so:

Persons taking advantage of, and acting on, insider information enable markets to react faster by increasing transparency, resulting in truer, more timely asset prices. This protects, not harms, shareholders. For example, if you sold securities based on your inside information of unscrupulous company management, security prices would more accurately reflect the true mismanagement of a company – protecting shareholders from disasters like Enron.

The argument touches on a fantastic point. Which is . . .

Our approach for increasing financial market stability and protection SHOULD be through increased transparency and competition, NOT more government regulation and oversight.

The consequences of the last year will force a change in the way we regulate our financial system and protect the health of our economy. However, thus far, the suggested solutions have focused on increased government regulation of market activity and intervention of company management. This is false logic.

The flaws in our current system do not justify the condemnation of the free market concept, nor do they suggest that our financial system will work better with a government appointed “czar” at the helm. It simply means we have not yet perfected our implementation of the free market equation.

We should be reviewing our current system of rules and regulations and asking the tough questions about why these exist in the first place? How can we adjust our current laws to let natural market forces push us towards greater stability and protection?

If deconstructing federal laws like insider trading can promote greater market efficiencies and help sustain market self-regulation, why do we insist that more federal protection is the answer? Can’t this be an example of “less is more”?

Posted in Unconventional Ideas | Leave a comment

Survival Skills from Chef David Chang

By Allen | Published: October 18, 2009

momofuku
There is no doubt about it, Chef David Chang is kicking some serious food butt, while simultaneously, offering a survival tactic for the rest of America’s entrepreneurs.

The 32 year old NYC chef, entrepreneur, and czar of the Momofuku restaurant dynasty has carved out his spot in the New York restaurant scene through sheer entrepreneurial grit and a relentless push towards culinary innovation. His unmatched style, combining Asian and American ingredients with French technique, has moved him into the restaurant big leagues, but it’s his off-the-wall innovations and creativity that are launching him into the culinary stratosphere. Innovations that include cereal-flavored milk ice cream, caviar stuffed hen eggs, and pork belly buns are game changing dishes and are attracting NYC foodies in herds.

But Chefs like David Chang are doing more than drive reservations, they are teaching American entrepreneurs the two essential survival skills for the economy of the future – creativity and design.

In an industry that sees very little advances in technology, touts high failure rates, and rests atop a mature growth plateau with deep market saturation, restaurateurs like Chang illicit superior artistic creativity and design to change the economics of the restaurant industry and drive demand for an abundant ubiquitous commodity. . . food.

Dan Pink, author of A Whole New Mind argues that artistic creativity and design are necessities in a future global economy:

Design is a high-concept aptitude that is difficult to outsource or automate – and that increasingly confers a competitive advantage in business.
- Dan Pink, A Whole New Mind

The way chefs call upon artistic inspiration as differentiation in the restaurant market, so will entrepreneurs in flat world economy – through a marriage of radical creativity and design with fundamental business. Competing on price, quality, and speed-to-market are no longer going to cut it.

In the digital age of ubiquitous quality, low price, and abundant availability, it will be design oriented creators, like Chang, who will rise to the top and meet the demands of global consumers.

Posted in Entrepreneurship | 1 Comment

Monetize that Pizza Box

By Allen | Published: October 15, 2009

photo by Adam Kuban
If you’ve ever been to NYC for any significant period of time, it’s impossible to ignore the abundance of takeout pizza joints through out the city, and further, that every joint uses the exact same generic pizza box design with generic “pizza shop” logo printed on the top. And I mean, THE EXACT SAME BOX.

Why has some entrepreneur not partnered with the manufacturer of these boxes to monetize the beautiful advertising space on top of the box? I’m not talking about long term ad campaigns with a big “Macy’s” or “HomeDepot” logo on the front, but instead, timely blitz marketing efforts with distinct calls to action.

If you want to advertise an upcoming concert, the late night pizza munching 20-35 year old bracket seems like a pretty good target market. Or, if you’re a mobile web/application company like FourSquare.com, why not run a blitz campaign that encourages users to “check in” at their favorite pizza joint?

Has anyone tried this before? Is anyone doing it currently?

Posted in Entrepreneurship | 2 Comments

Lessons from a Farmer: Find Profit in Your Company’s Waste

By Allen | Published: October 13, 2009

Photo by <a href="http://www.flickr.com/photos/skgz/3498486318/">skgz</a>
Companies could learn a thing or too from the local farmer. Specifically, how to find profit in seemingly useless waste.

After a recent visit to Stone Barns farm in Terrytown, NY (as part of NYC’s Food and Wine Festival), I began thinking about the synergies local small farmers are utilizing to dig profit out of a difficult and unpredictable profession, and how the same synergies could be used by bulky corporations to squeeze profit out of increasingly sluggish business units.

Stone Barns is part of a growing agricultural movement that experiments in eco and animal friendly sustainable farming techniques. This means developing new strategies for sustainably producing more products with less natural resources, all the while meeting market demand.

As a part of these experiments, farmers are discovering new ways to convert previously useless waste into new enriching products.

ie: Stone Barns has an on-site poultry processing plant that handles all the turkey and chicken products produced on the farm, which as a result, discards a large amount of poultry meat waste products that are not suitable for consumption. Instead of throwing this waste away, they developed an innovative fertilizing system that quickly transforms the meat products, as well as other cardboard box and paper products, into a rich fertilizer that is applied to their grass pastures to support richer grazing land for their sheep.

How can this same mentality be used in bulky corporations? Well, companies like Google are already finding ways to covert their “waste” into new product innovations – with the primary example being Google’s “20 % Rule”.

“We offer our engineers “20-percent time” so that they’re free to work on what they’re really passionate about.”
- google.com

Although not specifically stated, it’s clear that Google understands the employee mentality and recognizes that, on a daily basis, workers will never be 100% focused on the company goals or company dictated projects. Instead of losing this 20% of worker “waste” time to unproductive personal activities like web surfing, Google encourages its employees to take this time to work on whatever projects they want. And, as a result, has successfully converted this “waste” time into some of the finest Google innovations of the recent years including Gmail, Adsense, and Google News.

So the question becomes: How is your company converting its waste? What profit are you missing out on?

Posted in Entrepreneurship, Social Enterprise | 1 Comment

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